October 26, 2016

The Treasury Department and other federal agencies have released the initial financial results of the federal transportation trust funds for fiscal year 2016, which ended almost four weeks ago.

The Highway Trust Fund ended 2016 with a cash balance of $69.2 billion. Given the fact that the Trust Fund received a massive $70.0 billion transfer from the general fund of the Treasury four months into fiscal 2016, one could argue that every single dollar remaining in the Trust Fund at the end of the year was the result of a bailout by the general fund. (What with fungibility and all that.) When comparing spending to actual excise tax receipts on highway users, the Trust Fund ran a $13.0 billion deficit in 2016.

The Congressional Budget Office and the Office of Management and Budget have an ongoing dispute over the proper level of guesstimated transfers by states from highway funding to mass transit each year (CBO estimates $1.0 billion while OMB estimates $1.3 billion per year). In 2016, CBO was closer, with a net Highway Account to Mass Transit Account transfer of just under $1.1 billion.

The table below shows the unified HTF results over the last five fiscal years. For 2016, gross gasoline tax receipts were actually up by 3 percent over 2015 levels, while diesel tax receipts dropped by 0.8 percent and the other trucking industry tax receipts dropped by 4.4 percent versus 2015 levels. Trust Fund spending accelerated to an all-time high of $54.3 billion after dropping a bit in 2015.

(Ed. Note: The important thing to keep in mind here is that, while some of the “pay-fors” for the $70 billion GF to HTF transfer in the FAST Act may have been sketchy, from the point of view of the Highway Trust Fund, it doesn’t really matter. The entire $70 billion was transferred from the general fund to the Trust Fund in January and cannot be taken back by the general fund without a special law being passed by Congress. If the FAST Act “pay-fors” fail to materialize, that’s the general fund’s problem (i.e. American taxpayers’ problem), not the Trust Fund’s problem.)

The end-of-2016 Trust Fund numbers are pretty much in line with the Congressional Budget Office’s predictions in their August 2016 baseline update (see below). CBO had predicted that the Mass Transit Account would end 2016 with a balance of $17.8 billion (dead on) and that the Highway Account would end the year with $52.0 billion on-hand, which was $0.6 billion higher than the actual result. However, that level of inaccuracy on Highway Account balances is not really a problem, since that account is projected to end the FAST Act authorization period with almost $13 billion on-hand. It is the Mass Transit Account that might conceivably run a few hundred million dollars shy of the September 30, 2020 finish line if we have several years of slightly lower-than-expected gas tax receipts and/or higher-than-anticipated mass transit outlay levels.

In the maritime field, the Harbor Maintenance Trust Fund actually came close to achieving the long-awaited goal of port, harbor and shipping interests in 2016 – spending from the Trust Fund almost reached the level of Harbor Maintenance Tax receipts, reconciling user tax receipts with spending on programs to benefit users.

Total outlays from the HMTF (spurred by the authorization levels and incentives in the 2014 WRRDA law and largely fulfilled by the Appropriations Committees) reached $1.29 billion in 2016 – just $16 million below the $1.31 billion in Harbor Maintenance Tax receipts. (Spending was 98.8 percent of tax receipts.) This is in contrast to the massive imbalance between HMTF spending and receipts over the last 20 years that have contributed to a built-up balance in the Trust Fund of $8.75 billion at the start of this year (much to the consternation of the port community). (See this article from a few weeks ago for more details of the last 20 years of HMTF toils and travails.)

However, the big reason that spending and tax receipts almost synced up in 2016 was an unexpected drop in HMT receipts – the Administration’s February 2016 budget had predicted $1.557 billion in HMT receipts, but the actual level appears to have been $1.311 billion – $246 million, or 16 percent, below expectations. The 2016 tax collections were $119 million below the 2015 levels. The same Administration budget predicted $1.674 billion in HMT collections for fiscal 2017; we will see how that goes.

The White House had proposed HMTF spending levels for 2016 of just $951 million, $344 million (27 percent) below the level that Congress eventually enacted. The Administration’s 2017 budget proposed $986 million in HMTF spending; Congress is well on the way to ignoring that request as well.

The other (and much smaller) trust fund that finances some Army Corps of Engineers activities, the Inland Waterways Trust Fund, also stayed relatively static in 2016.

In the world of aviation, the tax receipts of the Airport and Airway Trust Fund stayed relatively stagnant in 2016, increasing just $138 million (just under one percent) over 2015. (However, 2015 was a decent-sized jump over 2014.) Outlays were down slightly after a large upswing in 2015.